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How To Make An Acceptable Offer On A Bank Owned Property
By: Simon Macharia |
| word count: 469 comments(0) views: 96 |
| In today's real estate market, most banks have more houses in their inventory than they can handle. They are selling more houses than anyone else in a market with very few buyers. |
Due to the real estate meltdown, most banks have ended up with more properties in their hands than they can handle. The are the leading home seller in a market that has very few buyers.
When buying these properties as a real estate investor or home owner, it is important to make sure your offer will be accepted.
Here are some tips to help you buy properties from banks cheap.
1) Get pre-qualified
When you are buying a property from a bank, you must first be pre-qualified, or show proof of cash.
This must be your first step because no bank will talk to you without it.
2) Get a good real estate agent
Almost all, if not all, bank owned houses are listed for sale by Real estate agents. You must therefore make any offer through the Realtor.
You must therefore get a good buyers agent to work for you.
3) Do your due diligence
Most bank owned properties need little to no repair. You must do a good repair estimate. This will be helpful to negotiate a better price.
Some conservative comps will be necessary to negotiate a lower price.
4) Get it inspected
Consider this a must when buying a REO property. Banks will not fix up houses, but a happy to give a discount for repairs.
Make sure your real estate contract has inspection verbage to get you covered.
An inspection will bring out issues you were probably not aware of. This would be a strong bargaining point with the bank which should also bring down your offer price.
Banks will reject your offer if you require them to fix the property. You buy this type of property as is where is. Ensure your contract shows this. They will offer discounts based on needed repairs.
5) Other costs
If the home is in a community where there is a home owners association, make sure that all dues are paid up, and your fees will be prorated from the day you own the property. Fees and fines are common in foreclosure properties.
Ensure you get these fees credited at closing.
Also make sure all taxes are paid. Make sure you get a prorated credit at closing.
Make sure there are no previous uncleared utility bills. Make sure these are cleared.
6) You offer should be lower than asking price
Banks are willing to negotiate. Always make an offer lower than the asking price. Properties that are older in the market will be more discounted than those that are just listed.
In general avoid making more than 10% lower than the asking price. If your offer is rejected, you can always offer a little more depending on the bank's counter offer. |
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